Office take up in Manchester city centre in the first half of this year was ‘significantly’ down on last year but it looks set to improve over the rest of the year, said CB Richard Ellis.
In fact, take up is expected to remain above the 10-year average, CBRE said.
247,000 sq ft of space has been let since January but a further 300,000 sq ft is under offer and there is a further 200,000 sq ft of demand that is likely to commit to space before the end of the year, it said.
Senior office agency surveyor at CB Richard Ellis north-west, Will Kennon, said: ‘The significant reduction in take up can be attributed to the wider economic problems but it’s also important to remember that a very healthy number of lettings are still in the pipeline and due to complete in the next couple of months. Indeed, Manchester is demonstrating robust characteristics in terms of office demand thanks to a mixture of public and private sector requirements from the likes of Manchester City Council (140,000 sq ft), The Strategic Health Authority (60,000 sq ft) and Beachcroft Solicitors LLP (25,000 sq ft).
‘Despite there being an increase in time between lettings going under offer and completing, we fully expect total take up to reach around 700,000 sq ft by the year end which will only be marginally lower than the five year average.
‘Office supply in Manchester is currently higher than it has been over the past five years with 665,000 sq ft of new build Grade A office space available for immediate occupation and a further 300,000 sq ft of uncommitted accommodation due for completion by Q4 2009. It is therefore encouraging that 300,000 sq ft of Grade A accommodation is already under offer. Having experienced a prolonged period of undersupply, tenants now have an array of options on large floor plate and small floor plate buildings to suite individual requirements.’
He said that while prime headline rents of £28.50/sq ft had been achieved, there has been downward pressure on net effective rents through an increase in rent free periods and a reduction in headline rents.